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South Korean bank launches Bitcoin-backed business loans
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Jeonbuk Bank, a South Korean commercial bank and subsidiary of JB Financial Group, has reportedly begun offering Bitcoin-backed loans to corporate customers. Local outlet EDaily reported Monday that the lender became the country’s first commercial bank to accept Bitcoin as collateral for won-denominated lending. The service is reportedly limited to businesses seeking operational capital.
The lending arrangement follows amendments to South Korea’s Civil Enforcement Rules that took effect on Oct. 1. According to the Supreme Court, the amended rules establish procedures for seizing and liquidating claims to virtual assets. In default, the bank can recover funds through court-ordered sales.
A specialized third-party custodian holds the Bitcoin used as collateral, according to EDaily. Jeonbuk Bank has adopted a system that lets it recover outstanding loans through proceeds of cryptocurrency sales without directly taking possession of the assets. The bank has not publicly disclosed the loan amount, interest rate, or loan-to-value requirements.
A bank representative told local outlet Chosun that it had already issued a loan but declined to identify the borrower. Cointelegraph reached out to JB Financial Group for confirmation but did not receive an immediate response. The undisclosed terms leave key questions about risk appetite and collateral management unanswered.
The move marks a notable step in integrating cryptocurrency into South Korea’s traditional banking sector. It could give businesses access to won liquidity while using Bitcoin holdings as collateral, potentially expanding financing options. However, it also raises risk-management and regulatory questions because Bitcoin prices can be volatile.
The launch comes as South Korean crypto exchange profits fell 78% in the first half amid a trading slump. If Jeonbuk Bank’s pilot succeeds, other commercial banks may consider similar Bitcoin-backed products under the new enforcement framework. The custody model and court-ordered liquidation process will likely face close scrutiny in the months ahead.
